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I've copies this post from the previous blog because it is very relevant here.

86. At 12:34pm on 05 May 2010, ChangEngland wrote:
I've worried myself, I've done a bit of budgeting...

The (only just still current) government's highest forecast for growth = 3-4%.
Lets say 3% growth for 10 years.

Current GDP is Circa 拢1.5 trillion 10 years growth at 3% results in GDP of 拢2.015 Trillion in 2020, a real increase of nearly one third or 515 Billion over 10 years. So lets go forward 10 years and apply Taxation to this increase in productivity at current base levels (approx. 38%).

This gives us 拢195 Billion extra income to the exchequer in the 10th year. (With a lot of luck and a lot of hard working taxpayers and a lot of export profits.) I realise taxed Company earnings/profits, VAT and duties and other taxes raise more but I'm assuming we need those to run the rest of the country not just pay debts. So lets just say that is it, in simplistic taxpayer terms.

The deficits for the next few years are going to be horrendous, it is estimated at about 170 billion for year 1. Add Interest at current Guilt yields of 4% ish and in 10 years time we have paid interest of 68 billion on the original 170 billion. Total 238 Billion.

So in the 10th year, all the taxpayers additional earnings can't pay back all of what we borrowed in year 1 :( So reversing the sum what we really need in 10 years time (to pay back year 1) is 238/38*100 = 626 Billion in Growth which is 3.5% Growth - hence the chancellor's 3.5% forecast to keep the markets happy until after the election. When they will admit this is highly unlikely and revert to half from growth and half from taxation & cuts. Simples.

To put this in context: There are around 32 million tax payers. So over 10 years the taxpayers have to increase their output (earnings) by 515,000 / 32 = 拢16,100 each which is 拢1,600 per year on average. OR they have to be taxed that much extra. And that figure is (given an average earnings figure of 26,000) 6% extra starting now! I don't see the growth (0.00x% gets us absolutely nowhere!) So tax it is then.

We are really really going to struggle to pay this off.

Getting back on topic and to the point, Greece has a population of approx 12 million. At the same ratio as us they have approx. 6 million taxpayers. They have just borrowed 100 billion Euros ish at 5%. Their GDP is currently around 350 Billion Euros.... They think they are going to pay that back with cuts? It seems to me they need 4% growth just to pay the interest and 7% to repay the capital at 10 billion per year( over 10 years) that's 11%. But they are saying 4 years? Greece must go bust.

I am but a lowly pleb with a calculator, so someone, possible a master of the universe, tell me what is wrong with my calculations?

In my personal view, national and international "Debt Jubilee" - is starting to look like the only way.

Perhaps we would be better off outside of the EU. Think of the cash we have poured in over the last 30-odd years, cash that has disappeared, unaccounted for! At least with our own currency we can retain the financial market based around the city of London. We don't manufacture much these days so we are reliant on the finance industry to balance the books. After the recent fiasco with the tax payer having to bail out some of the banks, it might be a good idea for the banks to pay us back so that we don't have to lay waste to low paid public sector workers jobs.
Those on benefits and those who are super rich will not be paying for our recovery, it will be all those people who are PAYE tax payers that will feel the yoke of austerity for the next few years.

We will all watch as the cuts begin around Europe. Each country will need to deal with this issue and only the Greeks have been forced to at this time. The best option is to force a no interest loan system, since the banks were bailed out there is no justification for them to profit from the mess they created. This would do more for recovery than the other options and reduce the impact on services and taxes. The banks have this sense of devine right to obscene profits. They stand by to go though the pockets of disabled nations. There is probably more to unfold about the banks and not only what they did but how they did it and my guess people will not be happy. As politicians make vague commitments to meaningless programs they have yet to grasp the anger of the citizens of their making sacrifices to maintain the advantages and wealth of bankers. The deeds have been done and the consequences are about to begin. Politicians still think it is about blaming the other party, the public has moved beyond such distinctions.

Stephanie wrote

"...growth is how we get out of this mess."

So let us inflate house prices again and redefine this as growth!!!! (That is after all what we did during the last decades.)

I agree that growth is the key - more importantly efficient growth. We must be competitive. We must cut waste. We must understand that wasteful activities and over priced assets destroy jobs and our competitiveness. Wasting hours a day with unnecessary unproductive commuting must be curtailed. Our cost base must be made competitive (and that includes the cost of housing - the major destroyer of jobs in the UK - employers have to pay higher wages than our competitors because of the cost of financing overpriced housing stock for employees.)

Only bankers make money from loans - they want all of your money and will redefine 'affordability' to be as much as is possible to extract from your pay packet - this must stop! (If it was OK for my grandfather to bring up three children and send them to university a century ago whilst spending one twelfth of his income on housing it should be possible to do it again! [I have his ledgers.] Another relation of the same generation saved a farthing of every penny he earned.)

Growth will be crippled, unless we tackle the major structural inefficiencies in our economy and house prices are a significant cause of our devastatingly poor performance and decline in productivity. A house is a place to live, not a second pension. Only the financial carpetbaggers gain from house price inflation. Real people and their employers just suffer.

"So why is Spanish and Portuguese debt getting downgraded while Britain is not?"

Because ratings agencies know the UK can (and will) print money to pay it off, whilst Spain and Portugal can not. See below on inflation.

"Crucially, our growth will also be higher in nominal terms because of higher inflation ... that 2% of GDP difference in cash-flow will be very welcome indeed to the Treasury."

Astonishing comment.. Additional tax due to inflation is still additional tax. And with inflation comes higher interest rates. How will this help the recovery?

"spending (and debt) is fixed in nominal terms. " Tell striking public sector workers that!

Stephanie, you're right - and it's regardless of whether there is a or not. The ultimate victor will inevitably have to face the challenge of reducing the deficit through drastic cuts in public spending and tax increases.

If the winning party does not give a clear indication that this is their priority, rating agencies will certainly have a field day deciding by how much they should downgrade Britain's rating. The only option forward is to push ahead for growth.

1) "The enormous current account deficits we've seen on the periphery of the eurozone would simply not have happened without the single currency: either the currency or the economy of these countries would have had to adjust long before (probably both)" - I've got a great idea - Why not have a separate currency for each country ! - it was Germany and France's big idea to get every one to have 12 referendum until people gave up and voted for 'Europe' and the Euro - they have benefited from it... so they can pay for it ! - which would leave them in a similar situation to as if they had kept their currencies, the only difference being the 3 dead people in Greece.
2) 鈥淲e need Economic Growth鈥� - what is this anyway ? - If the UK owes 拢100 to Germany and a person in the UK does some baby sitting for another person (more economic activity hence "Economic Growth" how does this reduce our debt ? If I sell the person a sandwich (is making sandwiches included in our 'making things' manufacturing figures ?) how does this pay our debt ? - It doesn't.
We can only pay our debt to the Germans by Exporting something to them, maybe a car - I hear they are not very good at making cars and so there will be much demand for our stylish designs. In general, Germany needs to become a Net Importer of UK goods and services, Greek goods and services...and that is not about to happen - so we can't pay off our 拢100 debt !
For 'Economic Growth' to happen then, as [Unsuitable/Broken URL removed by Moderator]Corporate Profits = Corporate Fixed Assets + Debt owed to the Corporate World, to get increased profits we need some combination of a) more Government Debt, b) more Consumer Debt, more Debt of Foreigners (i.e. an unlikely Export boom - unless we start exporting to places no-one else wants to like Greece and Spain)
3) What we need, overall, is to realise that the Financial system we use is not an accurate proxy of reality. The main reason for this is that it is out of date as it was designed in pre-machine age Venice and made a merry mess during the machine age and an equally merry mess that we can see now in the computerised age - the only time it seems to work is during a post war boom when lots of Company fixed assets are being built.
What we need is not More Growth (are we short of cars ? - they are piled high in the warehouses at the docks !) - we need a new Financial system for the computerised age - one that recognises that 'Full Employment is sooo 17th Century - contains the basis of such as system.

Growth...

Does that mean Britain must export? Export where?

Mars?

European Commission - Competent?
Rating Agencies - Competent?

UK credit rating not downgraded - because the UK has a big fat public sector which can be 'cut' - we don't even need 'growth' to keep Triple Credit rating - the rating agencies are waiting to see if the UK elects a new competent government to replace the current UK sham government.

If Brown stays in power - the UK will receive evry kind of sanction and downgrade as what little market confidence is around will evaporate.

Growth is the word - that deflects from the Commission actually warning Britain a day before general election to cut its budget deficit.

'Growth' is one thing - 'real growth' is another - when are we going to get some 'real growth' as we do not have any 'real growth' at the moment - in the current real UK 'depression'.

A real non-story on the eve of the most important general election since 1979 or even the second world war.

Imagine a hypothetical society where everyone pays 50% tax. 80% of the population work in the public sector (financed by taxation), and a fair percentage of them are doing useful work. The remaining 50% of people's income is extorted by the Financial Services Mafia, who employ the remaining 20% of the population. These employees earn on average four times as much as the public sector employees, but still like good citizens pay their 50% tax - so the Government accounts are nicely balanced.

A completely unrealistic model of course. Anyway here's the question - which would benefit the economy more
1) Make an across the board cut in public spending
2) Force the Financial Services Mafia out of business

1. At 6:42pm on 05 May 2010, DevilsintheDetail wrote:

I've copies this post from the previous blog because it is very relevant here.

86. At 12:34pm on 05 May 2010, ChangEngland wrote:
I've worried myself, I've done a bit of budgeting...

The (only just still current) government's highest forecast for growth = 3-4%.
Lets say 3% growth for 10 years.

>>>>>>>>>>>>>>>>>>>>>>>

UK Govt budget deficit forecasts are based on the then current deficit ie halving the then current deficit in 4 years, with the 'assumed benefit' of strong 'growth'.

Due to the lack of growth - the government has already missed and is behind with its own budget deficit target and the debt and budget deficit will likely increase due to further borrowing and higher rate and likely shorter term interest charges.

Halving the original deficit in 4 years is very optimistic indeed; for a government with an atrocious record of inadequate fiscal responsibility.

kathystephen @ 8: "Does that mean Britain must export? Export where?"

To which I would add "Export *what*".

The trouble with "growth" is that it is (or certainly has been) too much based on people buying things they don't need with money they haven't got, and with some tax increases almost inevitable (I don't believe that "efficiency savings" are going to come anywhere near making much difference) the amount of money people haven't got is going to increase as well. If the public sector is "trimmed" (euphemism alert - euphemism alert) then the amount of money for spending to increase "growth" is going to shrink further.

There are some things that can be controlled one way or another, but I'm not sure that growth is one of them. It's another "hurrah" word the implications of which tend to be ignored.

I also find myself in agreement with John @ 2: exactly *what* do we get for our net contribution? One item any business struggling to *stay* in business will seek to control is "overheads". Our EU contribution is a monstrous overhead and we would do well to reduce it, preferably to zero. Fat chance...

Growth Growth Growth....call me naive, but I fail to see how growth as an engine for the econnomy can be sustainable, politicians talk about how growth and GDP (the total value of goods and services in the economy right??) must increase year on year otherwise we are doomed
BUT, to my simple mind, I fail to see how in a world of finite resourses how this model can go on indefinately, with increased GDP comes an increase in population for one thing....hence why we have had such a demand for imported labour for the past decade or more
Surely we need to have a re-think here, Growth and GDP may have served as an indicator of the strength of an economy for the last century and more....but isnt that just plain wrong now ??....why cant we have 0% increase in GDP....how about trying for "prosperity without growth".....I believe it could be done if our economists and politicians had some real imaginatoion and vision

I believe the Mistress of the Charts is correct in addressing the issue of growth. Some fundemental structure is necessary and at the current time only financial services seems to be doing well. She is also correct in the bubble making of the fiancial services industry, i.e., plant hybrid, pick and sell, soil depleted . The double-bladed sword of service cuts (increased unemployment) and debt reduction (less funding for economic development and infrastructure) makes the future a bit cloudy. To add another nail in the coffin, taxes will need to rise and thus less will be available to purchase. Most economic activity is the day to day purchases of every person and not the large companies. As the Euro partners go though the same process in different degrees less becomes available for trade. As austerity is a way of life in Asia no adjustments are necessary and more production will move in that direction. It is obvious that the maintenance of the status quo is not going to work, yet no one has any ideas that look promising. In the past the mantra has been grow or die and the new mantra may be, change or die.

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Actually another way out of the mess, as many a business leader has recognised in the past, is not only to increase revenue but also to cut costs and in many cases there are far greater gains in finding 鈥渃ost efficiencies鈥� than trying to expand market share.

By 鈥渞educing costs鈥� I mean reducing our imports as opposed to just reallocating people from one part of the economy to another i.e. making people redundant is just moving people from the 鈥渆mployed鈥� part of the economy to the 鈥渦nemployed鈥� part of the economy but still remain within the overall economy so little has changed.

Instead, if we look at our import / export numbers then in every single major category we import significantly more than we export and in some of those areas, e.g. food, it strikes me that there鈥檚 lots of scope for cutting imports and producing more in our homeland. (If I wanted to be really radical I could even go as far as advocating rationing again but I鈥檒l leave that line of thought for another day though would observe that a company would just call that budgeting rather than rationing).

On the subject of food I read somewhere that 25% of the food 鈥渃onsumed鈥� in the UK is actually thrown away 鈥� mostly by supermarkets and restaurants because it doesn鈥檛 meet 鈥渜uality standards鈥�. If we could cut that wastage by a significant percentage e.g. from 25% to 20% wastage then we鈥檇 be billions better off (at least 20 Billion per annum) without anyone having to feel any pain. The main reason for the wastage is because of overly restrictive legislation and blind adherence to 鈥渟ell by鈥� dates.

There鈥檚 an equally good case to be made about energy consumption 鈥� again we import much more than we export (mostly Natural Gas & Oil I believe) but by being more energy conscious we could save a few billions as a nation.

Of course, the problem is that it requires all of us to take some responsibility for what we consume which is a lot less acceptable than sacking a few hundred thousand 鈥渙ther people鈥� which is pretty much the only suggestion I鈥榤 hearing from the political parties.

Just a thought鈥�

Growing our way out of this mess is just not going to happen.

Debt is just one person owing money to another. If you can persuade the creditor to write off the debt then the problem just goes away. Some 70% of UK Government debt is owed to our own banks and pension/insurance funds - which in turn represents money "owned" by (primarily rich) British people.

Writing off the debt = redistributing wealth from rich to poor (they are the same thing).

The only growth Labour achieved was population growth.

10% more people = 10% "bigger economy"

In corrected terms there was probably zero growth for ten years. There certainly wasn't any in manufacturing or other real economy sectors.

I read the Green Party Manifesto from cover to cover, it is the first vaguely credible alternative to free market economics that I have ever come across, it needs some refining and some work.....but I think it has merit, it really does make some sense, take a look some time

I thought Greece was the word!

Real growth means job creation and falling unemployment.

We have artificial QE or technical growth - the opposite - the sort that makes filthy rich banxstas - even more filthier richer banxstas

Banxsta-nomics!

We both seem to be in broad agreement: growth IS the answer. It's been my perpetual theme. We've had too much gloom and doom.
The OECD is much more bullish about prospects for the UK economy and my soundings suggest they're correct. The UK economy is likely to recover sharply this year. Which will lead to a pro-cyclical rise in corporate profits and VAT receipts that'll be greater than the GDP increase. That's the main answer to 'the deficit'.
However, the economy did shrink by 6% in 2008 & 2009 instead of growing by 2.5% in both years. So we're 10+% behind the planning assumptions of 2007-8 and unlikely to make that up for a few years. That fall in tax revenues is what caused the deficit to be so large.
Higher tax revenues from both banks and other corporates this year and next will go part of the way to recovering a sustainable balance in our national finances. Cutting services is a narrow way to achieve a better balance, so efficiency gains from deeper use of IT will have to play its part.
So there we have it. GROWTH is the answer. Not cuts. But that realisation is maybe too late to change the election agenda.
After all that Keynesian stimuli and QE of 拢200billions from the BoE, we certainly ought to be onto a growth path by now.
Maybe Merve the swerve was just kidding his former colleague?

You said.... "The only growth Labour achieved was population growth.
10% more people = 10% "bigger economy"
In corrected terms there was probably zero growth for ten years. There certainly wasn't any in manufacturing or other real economy sectors"

BINGO, the last 13 years of frantic econnomic activity was totally pointless, there is hardly anything that can be shown to have resulted from it, it was economic activity for the sake of it....just waste and pollution
Your point on population growth is spot on, jobs were created, and we sucked in labour to fill them (picking daffodils etc) but now we have more demand on our public services, more demand on our infrastructure and more people to riot if/when the economy really goes into freefall....so what was the point of all that "growth", and now the only solution anyone can come up with is that we must return to growth....I despair

Devilsinthedetail has it spot on. Additional difficulties for failing economies which does not show in the numbers is that the reason that they are failing is that their national cultures are uncompetitive. That is their education, attitude to manufacturing and science, entrepreneurial abilities, and much more such as social welfare, embedded in their societies.
When these problems become too severe they cannot be corrected by fiscal measures. There will be social break down and mayhem, default, and only then from the chaos of national poverty can the work ethic and competitiveness be regained.

You can forget growth unless we and the rest of Europe adopt protectionist policies and put people and what finance there is left back to work.

re #18 Non London View
.. no growth in the economy for ten years .. no growth in manufacturing
?
Did not those 'evil' bankers come up with growth in 'invisibles' in those ten years, and the carbon traders, too? And did not manufacturing actually increase in relation to our GDP? OK, only 1%, if I recall correctly; not much for ten years hard Labour. Again, is not our so called 'shrinking manufacturing sector' a MUM?

re #19
Unfortunately, what they want to do with transport would sink the most robust economy in the history of the world. Ever. Permanently. And would nail some of our growth earnings - from being an airport for the world.

re #22
Inflation ain't growth! Well, not REAL growth.

Dear readers

No mention of the latest research from the Bank for International Settlements. I'm surprised. The Treasury, BoE, and all those who invest in our economy will read this research, you should to. Here's the link.

[Unsuitable/Broken URL removed by Moderator]

Once you've read this you'll know that growth isn't a choice and every barrier real or imagined will be striped away over the next few years. Planning law, business regs and rules, complex tax structures are luxuries we can no longer afford. Zombie banks and zombie households will have to hit the wall. Invest accordingly.

#25. foredeckdave wrote:

"You can forget growth unless we and the rest of Europe adopt protectionist policies and put people and what finance there is left back to work."

Protectionism - NO. FDD, I think there is very good historic evidence that any rush to protectionism destroys more than it protects.

Putting finance to work - YES, but absolutely not into house price inflation.

You want growth? That's easy.

Top slice bank profits by say 5% and use the money to invest in start-ups and early stage high value adding companies. Use it also to reacquire companies we've sold off to overseas buyers and to buy overseas companies in order to form larger UK groupings.

re #24
Good post. But Howe's valedictory speech, after resigning as Chancellor, comes to mind. Call us the team, in place of Howe and cabinet colleagues, and the governments of the past forty years in the place of the Iron Lady.

Over that period, we have had to go into bat with our bats broken AND our pad straps tied together AND our gloves on back to front!

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Growth means continuous overconsumption, inflation and the creation of yet another bubble which will fuel this growth.

Not growth but sustainability is the key, Stephanie.
Sustainability means quickly getting rid of finite energy sources like oil and exploiting better and more efficient ones. It also means putting profit aside as the main economical incentive and promoting cooperation.

Unfortunately, it is now more that clear that the monetary system is not capable of promoting sustainability as a vehicle for progress. So we are doomed to keep going through smaller cycles of boom and bust until we reached to big one, the point of no return.

There are other way than the monetary system but journalists like Stephanie and Robert prefer to ignore them or are simply unaware of them.

It's a shame that humanity can never shift from one system to another in a peaceful and painless way.

I see the only growth happening in the America funds as they buy up any and every company here in the UK
And as for growth here, with all being shut down what growth?

But then I could be called cynical.....

Wise words from a wise man over 2000 years ago.

"The budget should be balanced, the Treasury should be refilled,
public debt should be reduced, the arrogance of officialdom should be tempered and controlled,
and the assistance to foreign lands should be curtailed lest Rome become bankrupt.

People must again learn to work, instead of living on public assistance."

- Cicero - 55 BC

What have we learned in 2,064 years?

Evidently nothing..

Stephanie would do her readers a lot better if she just taught basic economics. We need real private sector jobs. Y'know, taking natural resources, turning them into something useful more effeciently than ever, and jobs around that. Immigration was the UK economy's way of getting around the minimum wage law and lazy Britons corrupted by benefits. Only proactive and educated workers from abroad were worth minimum wage. Real unemployment rose right from 2000 as Labour pushed people into education and benefits. The UK took the wrong fork in the road years ago.

Chris @ 37 is right. But it's worse. Every time a UK person contacts (perhaps unwillingly) an offshore call centre it contributes to our dire trade deficit.

Morning Stephanie,
nice article but isn't this stating the bloomin' obvious?
With respect to growth, I refer you to the Chinese model which is currently being executed. One consequence of their desire for growth (and to offload some of those dodgy dollars) is their requirement to buy/ invest in all of the worlds material resources (oil, copper, iron-ore usw).
This has driven the price of commodities to absurd levels.
The Chinese now want to cool the bubble arising in the "first tier city" housing market by various Government edicts. The result is that commodity prices are dropping quite fast (see the price of copper).
The point of course is that the Chinese have a national plan which they are executing based on long term objectives.
It strikes me that the essential ingredient to growth is to have a national plan for it. Neither the USA nor UK have such national plans for energy,transport,utilities, public services, housing.
Without such plans, aren't we bound to fail to grow?

It seems strange that so many people in positions of political power seem to think it is more important to ensure that Greece does not default on its debts (as it has in the past on a number of occasions), until one remembers that the funds for Greece are actually mainly for the bankers in France, Germany, Switzerland, with a smaller share in the USA and UK. These same bankers who get involved in sub-prime fiascos and expect to be bailed out are now wanting to be bailed out for making bad loans to Greece on the assumption that it was as safe as Germany. This is another example of 'clever people' being stupid. So why do we keep bailing them out?
Let the Greeks default, the bankers will lose their money, Greece can abandon the Euro and still stay within the European Union. However, the problem is presented as being based upon the irresponsible and reckless management of Greece by the politicians. This may be true, in which case the culprits should be brought to justice if criminal acts have been committed. But to suggest that ordinary Greek people should pay for the bad decisions of the international banks is one more example of a world gone mad.
Please spare me the argument that if some of the banks go bust it will be the 'end of the world'. Banks have gone bust since the earliest of times and others come along to fill their shoes. It's a lame and false excuse for special treatment.
Oh, and if somebody suggests Greece will never be able to borrow any more money after a default, then I suggest you take a look at their economic history. Countries which default, rarely have long term problems convincing capital markets that 'things are better now.' After all, at least if Greece wrote off its debts, it could set about developing a series of budgetary plans that were not hampered by being unrealistic and dishonest goals. Of course, if Portugal, Spain and other also decided to default, then things could get awkward. But then we are told by the fine upstanding leaders of these countries that they are not in any danger of defaulting: so things must be alright.

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#1 (DevilsintheDetail / ChangeEngland)

That's an interesting bit of number-crunching and it demonstrates the high level of debt by the standards of recent history. But governments don't set themselves the objective of actually repaying public debt - they are merely concerned to maintain its manageability (The British public debt started in the 1690s and from then on rocketed periodically in times of war, only to be steadily reduced in times of peace and prosperity). The government's task over the next few years will be to reverse the trend towards increased indebtedness without stalling the economy.

Another reason why the relatively large public debt is not as calamitous as it might seem, is the point that is made in Stephanie Flanders' article. If the annual deficit is dealt with over the next few years (a big 'if', I know), and if the interest is paid each year, the real value of the total debt declines each year by the rate of inflation - that is a significant decline.

The real point about the high deficit is that the need to reduce it limits the government's freedom for manouevre in fostering economic growth and achieving whatever social objectives it may have. If only Mr Brown had stuck to his 'golden rules'.

#30 JFH,

A number of things are very clear:

We cannot continue with globalsiation. In the West we have destroyed the basis of true wealth generation for the fraud of low prices (short term gain and long term loss. In the East we have created a manufacturing bubble that cannot be sustained by the social and political infrastructure in the long term.

Particularly in Europe, we are unwilling to lose the level of sevices and facilities that we currently enjoy.

We cannot continue to carry a Europe-wide unemployment figure of 10%. If, a may prove likely the second wave of this depression hits in 2011/12 this figure will rise significantly.

The imperative for Europe must be to redress these losses as the first stage of economic recovery. This can only be achieved if we make work opportunities available once more.

I accept that, in the medium-long term, protectionism can lead to stagnation. However, within Europe we do have significant differences between the member states of the EU to help offset that by internal competition.

If we stay with our present policies then we will be caught in the 'meat grinder' of the international financial breakdown.

24. At 9:53pm on 05 May 2010, Eddie Hatfield wrote:
Devilsinthedetail has it spot on

Not me. I Just copied. ChangEngland made the original post

Prepare yourself for currency devaluation dressed as economic growth.

Lots of very economically literate comments, but for those of us who struggle a bit with figures, please help to expand the audience for these important discussions by clarifying carefully which % of what you're referring to each time. Sometimes the figures you quote just seem contradictory at a first glance -- e.g. how is 12% more than 13.6% (but you're comparing different years).

There's enough economic shorthand flying around already without mystifying the basic data.

I suppose the main problem is that every other paragraph mentions another percentage and it's not always immediately clear from which year -- maybe if you lined them all up together I could more easily distinguish which is what?

"largest budget deficit in the European Union in 2010 - at 12 % of GDP... ... though last year's Greek deficit...13.6% of GDP"

"stock of debt...86.9% for the UK"

"2% of GDP difference in cash-flow"

"forecast for the UK is for growth 1.2% in 2010 ... Britain's national income will grow by 3.7% in cash terms in 2010"

"current account deficit will be around 1.6%"

18 - Well said..
its the reason gordon brown has always talked about GDP increases - not GDP per Capita increases.

大象传媒 homepage quote of the day: "Except the blind forces of Nature, nothing moves in this world which is not Greek in its origin." HENRY MAINE (1822-88) English historian
Startlingly appropriate.

#43 (foredeckdave)

Regarding protectionism, it is brave of you to set yourself against basic economic theory and the overwhelming evidence of economic history at the same time. Because of the unusually large importance of international trade to the UK economy, a rise of international protectionism would probably be worse for us than for any other country on earth. Not many people these days think globalisation is bad for economic growth. They usually argue against it from a 'spiritual' point of view.

You might want to check this out: .

Why would any one want to set up a company in England?
1,If you are successful you will be demonized by the press.
2,You will be penalized through the tax code
3,If you hire a lot of people you will have to deal with England's horrendous health and safety practices
That is why jobs are going to India and China

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#49 capncook wrote:
"...basic economic theory and the overwhelming evidence of economic history" - There is actually no economic theory of international trade ! not as it's done at the moment anyway. The text books are full of - "if country A sells cars to Country B and country B sells bikes to Country A..." - we don't do this though.
What is happening in reality is better described as "Uni-Trade" - China sells to us and doesn't buy from us" this leads to massive build up of our debt owned by China. Other parts of text book trade say that if a country's goods are too expensive it's currency will devalue so that it can trade at a lower price. Greece can't de-value the Euro on it's own though it's having a good try so this lead to massive debt build up by Greece - There is no Theory of Economics that says this
is a good idea - can you show me one ?